[PPT] - H1 2018 Results Rome, 31 July 2018 ACEA Group Executive Summary PowerPoint Presentation

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H1 2018 Results

Rome, 31 July 2018

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2 H1 2018 Results

ACEA Group

Executive Summary

ONE YEAR ON FROM OUR FIRST MARKET PRESENTATION.......

..........IN THE LAST TWELVE MONTHS THE COMPANY HAS FACED MAJOR CHALLENGES RETURN TO ROLE OF INDUSTRIAL MULTIUTILITY

 Strategic guidelines 2018-2022: significant boost for infrastructure investment, breaking with the approach of recent years.  Restructuring of operational processes and organisation. WATER EMERGENCY (August 2017)  Since August 2017, we have recovered up to 2,300 litres of water per second, through intensive leak detection and repair programme.  We have reduced volume of water lost to leaks to below 38% of amount fed into the system. The Company’s remains heavily committed, involving the use of innovative technologies. BUSINESS PLAN 2018-2022 (November 2017)

 Approval of Business Plan 2018-2022, envisaging significant increase in infrastructure investment and based on the following pillars:

industrial GROWTH, constant LOCAL FOCUS, development of technologies and INNOVATION, operational EFFICIENCY.

Capex of €3bn.
Average annual EBITDA growth of ~6%.
Operating efficiencies with cost and capex savings of €300m in the

period 2018-2022.

Total dividends over the life of the Plan €0.7bn; Payout to remain above 50%.
Net Debt/EBITDA down to 2.8x in 2022.

The Business Plan was a great success with investors and analysts, who judged it to be «CREDIBLE AND DELIVERABLE», above all welcoming the major investment to be carried out. All analysts raised their targets price.

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3 H1 2018 Results

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Executive Summary

AGREEMENT WITH OPEN FIBER (January 2018)  Agreement with Open Fiber for the rollout of an ultrafast broadband communications network in the city of Rome.  The project will involve the construction of a next generation fibre network, offering ultrafast connectivity to the inhabitants of Rome, in the next five years. The network will enable a series of cultural, health and social services and the development of both businesses and the public sector. BOND ISSUE (February 2018)  Successful issue of bonds as part of the €1bn EMTN programme, divided into two tranches :

€300m, maturing 8 February 2023 and paying coupon interest of 3-month Euribor +0.37%;
€700m, maturing 8 June 2027 and paying a fixed rate of 1.5%.

The new all-in average cost of debt is 2.2% with an average term to maturity of 5.7 years.

.......... IN THE LAST TWELVE MONTHS THE COMPANY HAS FACED MAJOR CHALLENGES

continued

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4 H1 2018 Results

ACEA Group

Executive Summary H1 2018

GUIDANCE FOR 2018 UPDATED GUIDANCE FOR 2018  EBITDA +3%/+5% on 2017 > +5% on EBITDA for 2017 (€840m)  CAPEX up on 2017 CONFIRMED  Net debt €2.6-2.7bn TARGET ~€2.6bn

FIRST-HALF RESULTS FOR 2018 ARE SOURCE OF GREAT SATISFACTION

The H1 2018 Results have exceeded expectations and have resulted in growth across all financial indicators:  EBITDA €450m +9%  EBIT €251m +29%  Net profit €143m +38%  Capex €282m +12%  Net Debt/EBITDA LTM 2.9x  Working capital performance reversed:

a cash inflow of €20m from movements in working capital in the second quarter of the year
a cash inflow of €11m from movements in working capital in the last twelve months

WATER: Big improvement in collections (ATO2 and ATO5), reduced water leaks, doubling of capacity of Peschiera source, launch of installation of smart meters,

perating efficiency.

ENERGY INFRASTRUCTURE: Growth in line with the Plan, operating efficiency, improved public lighting service. COMMERCIAL AND TRADING: major improvement in collections, Customer Centric approach, opening of 3 physical shops in progress. ENVIRONMENT: Re-start of Aprilia and Sabaudia plants, optimisation of WTE maintenance plan.

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5 H1 2018 Results

ACEA Group I NCREASED EBI TDA GUI DANCE FOR 2 0 1 8

H1 2018 financial highlights

(€m) 30 June 2018 (a) 31 Dec 2017 (b) 30 June 2017 (c) % change (a/b) % change (a/c) Net debt 2,570.3 2,421.5 2,401.4 +6.1% +7.0% Invested capital 4,236.6 4,232.7 4,145.5 +0.1% +2.2% Capex 282.0 252.2 +11.8% (€m) H1 2018 (a) H1 2017 (b) % change (a/b) Consolidated revenue 1,454.3 1,372.5 +6.0% EBITDA 449.9 414.1 +8.6% EBIT 250.7 194.9 +28.6%* Group net profit/(loss) 142.7 103.5 +37.9%*

Initial guidance +3% (€865m) +5% (€882m)

Capex guidance 2018: up on 2017 Net debt guidance 2018: €2.6-2.7bn Updated guidance > +5% EBITDA

2017 €840m I NCREASED CONFI RMED TARGET ~ € 2 .6 bn

* EBIT and net profit to rise 17% and 21%, respectively, compared with the adjusted results for 2017 (after stripping out the negative impact – totalling €19m before tax – of the restored ownership of a property housing a car park and a reduction in the amounts due to Areti from GALA).

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6 H1 2018 Results

ACEA Group

414.1 19.9 18.6 3.5 0.4 0.6 (1.3) (5.9) 449.9

1H2017 Water Energy Infrastructure Commercial and Trading Environment Overseas Engineering and Services Holding H1 2018

EBITDA

EBITDA H1 2018 EBITDA (€m)

H1 2018 H1 2017 Change

5,545 5,449 +96

Average Group workforce

25% 75% EBITDA from non-regulated businesses EBITDA from regulated businesses 42% 39% 9% 7% 1% 2% Water Energy Infrastructure Commercial and Trading Environment Overseas Engineering and Services

EBITDA 192 179 44 32 7 8 -12 H1 2018 €m

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EBITDA and quantitative data

H1 2018 financial highlights

Water

EBITDA main drivers

(€m) H1 2018 (a) H1 2017

(b)

% change (a/b) EBITDA 192.3 172.4 +11.5%

f which:

Profit/(Loss) from companies consolidated under IFRS 11 17.2 10.0 +72.0% Capex 156.4 121.9 +28.3% Companies consolidated using equity method +€7.2m Quantitative data H1 2018 H1 2017 T

tal volume of water sold

(Mm3) 210 208 Acea ATO2: +€6.7m (quality bonus €15.7m) H1 2018 (a) H1 2017

(b)

Change (a-b) Average workforce 1,794 1,774 +20 EBITDA GROWTH Acea ATO5: +€4.0m KEY HIGHLIGHTS  Increased collections at ATO2 and ATO5 due to improved collection strategy  Extension of Acque’s concession term to 2031

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Quantitative data H1 2018 H1 2017 T

tal electricity distributed (GWh)

4,845 4,842 Number of customers (‘000s) 1,627 1,628 T

tal electricity produced (GWh)

298 234

Energy Infrastructure

EBITDA main drivers

(€m) H1 2018 (a) H1 2017 (b) % change (a/b) EBITDA 178.6 160.0 +11.6%

Distribution

155.1 135.8 +14.2%

Generation

25.2 21.9 +15.1%

Public Lighting
1.7

2.2 n/s

Capex 105.5 105.2 +0.3% Generation +€3.3m - increased hydroelectric and thermoelectric production (completion of T

r di Valle plant)

H1 2018 (a) H1 2017

(b)

Change (a-b) Average workforce 1,386 1,362 +24

EBITDA and quantitative data

H1 2018 financial highlights

Distribution up €19.3m EBITDA GROWTH Public Lighting (in 2017 LED plan effect) KEY HIGHLIGHTS  Over 120 km of fibre infrastructure installed

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Commercial and Trading

EBITDA main drivers

Quantitative data H1 2018 H1 2017 T

tal electricity sold (GWh)

3,086 3,408

Enhanced Protection Market 1,234 1,316 Free Market 1,852 2,092 No, of PODs for electricity (‘000s)

1,190 1,229

Enhanced Protection Market 865 914 Free Market 325 315

T

tal gas sold (Mm3)

73 57

No. of gas customers (‘000s)

169 166 (€m) H1 2018 (a) H1 2017

(b)

% change (a/b) EBITDA 44.1 40.6 +8.6% Capex 5.5 7.9

30.4%

H1 2018 (a) H1 2017

(b)

Change (a-b) Average workforce 465 476

11

EBITDA and quantitative data

H1 2018 financial highlights

EBITDA GROWTH KEY HIGHLIGHTS  Decline in enhanced protection market customer base partially offset by growth in free market  Reduced inbound calls (-37%) reflecting improved customer experience

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Quantitative data H1 2018 H1 2017 Treatment and disposal* (Ktonnes) 552 549 WTE electricity produced (GWh) 178 175

Environment

EBITDA main drivers

(€m) H1 2018 (a) H1 2017 (b) % change (a/b) EBITDA 31.8 31.3 +1.6% Capex 8.6 8.5 +1.2%

* Includes ash disposed of

Aquaser (sludge recovery): -€1.5m Iseco: +€0.2m

EBITDA and quantitative data

H1 2018 financial highlights

H1 2018 (a) H1 2017 (b) Change (a-b) Average workforce 360 350 +10 EBITDA SLIGHTLY UP Acque Industriali: +€0.2m Acea Ambiente: +€1.5m KEY HIGHLIGHTS  Re-start of Aprilia and Sabaudia plants  Consents obtained for Orvieto landfill and Sabaudia composting plant WTE growth due to increase in inputs, gate fees and energy price

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EBITDA and quantitative data

H1 2018 financial highlights Overseas

(€m) H1 2018 H1 2017 EBITDA (11.7) (5.8) Capex 3.1 5.9

Holding

(€m) H1 2018 H1 2017 EBITDA 7.3 6.7 Capex 2.2 2.5 H1 2018 (a) H1 2017 (b) Change (a-b) Average workforce 606 590 +16 H1 2018 (a) H1 2017 (b) Change (a-b) Average workforce 662 583 +79

Engineering and Services

(€m) H1 2018 H1 2017 EBITDA 7.5 8.8 Capex 0.5 0.4 H1 2018 (a) H1 2017 (b) Change (a-b) Average workforce 272 314

42

Primarily due to transfer of Facility Management from Engineering and Services unit.

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H1 2017 H1 2018

EBIT and net profit

(€m)

H1 2018 H1 2017 % change

Depreciation 161.8 152.5 +6.1% Write-downs 31.9 46.3

31.1%

Provisions 5.5 20.4

73.0%

T

tal

199.2 219.2

9.1%

EBIT (€m) NET PROFIT (€m)

H1 2017 H1 2018

194.9 103.5 142.7 250.7

TAX RATE 3 2 .9 % 3 0 .8 % Increased depreciation, partly due to increased investment in IT assets with shorter useful lives. Reduced credit losses due to improved collections and transition to IFRS9. Lower provisions for early retirement and redundancy scheme compared with H1 2017.

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Capex

252.2 34.6 0.4 (2.4) 0.1 (0.3) 0.1 (2.7) 282.0

1H2017 Water Energy Infrastructure Commercial and Trading Environment Overseas Engineering and Services Holding H1 2018

CAPEX (€m) Capex 156 106 5 9 2 1 3 H1 2018 €m • Repair and

widening of water and sewage pipes

Extraordinary

maintenance of water centres

Work on

treatment plants

Work on the grid
Extraordinary

maintenance

Installation of

fibre infrastructure

Work on Terni and

San Vittore WTE plants

Work on waste

treatment and biogas production plants at Orvieto landfill

Reduced

investment in ICT

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EBITDA H1 2018 Change in working capital* Capex Finance costs Change in provisions Total cash flow Other * Before provisions for bad debts

Focus on cash flow (1/2)

( (€m)

H1 2018 A H1 2017 B Diff. A-B

EBITDA

450 414 36

Change in working capital

(82) (209) 127

CAPEX

(282) (252) (31)

FREE CASH FLOW

85 (47) 132

Net finance income/(costs)

(42) (31) (12)

Change in provisions

(39) (54) 15

Dividends

(134) (132) (2)

Other

(19) (11) (8)

TOTAL CASH FLOW

(149) (274) 126 Dividends 450 (82) (282) (42) (39) (134) (19) (149)

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Focus on cash flow (2/2)

 Q2 2018 CASH GENERATED: €20M INFLOW FROM WORKING CAPITAL  H1 2018 LTM CASH GENERATED: €11M CASH INFLOW FROM WORKING CAPITAL Increase in working capital needs in H1 2018 entirely due to trade payables as a result of seasonal factors Change in working capital in H1 2018 due to receivables practically zero thanks to improvement in collections

OPTIMISATION OF COLLECTION STRATEGY IN WATER, RETAIL ENERGY AND ELECTRICITY DISTRIBUTION BUSINESSES:

WATER (ATO2+ATO5): €60m increase in collections versus H1 2017, partly thanks to

agreements with major debtors. ATO2’s DSO cut by 3 days.

RETAIL ENERGY: 5-day improvement in DSO.
ELECTRICITY DISTRIBUTION: €50m increase in collections versus H1 2017.

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Net debt

NET DEBT / EQUITY 30 JUNE 2018 NET DEBT 30 JUNE 2018 / EBITDA LTM

1.5x 2.9x

Ratings

BBB+ Stable Outlook Baa2 Stable Outlook

9% 91%

Debt structure (maturity and interest rates at 30 June 2018)

>

Fixed rate 73%

>

Average cost 2.22%

>

Average term 5.7 years

Floating rate Fixed rate

73% 27%

(€m) 30 June 2018 (a) 31 Dec 2017 (b) 30 June 2017 (c) Change (a-b) Change (a-c) Net debt 2,570.3 2,421.5 2,401.4 148.8 168.9 Medium/Long-term 3,359.7 2,706.6 2,804.3 653.1 555.4 Short-term (789.4) (285.1) (402.9) (504.3) (386.5)

Debt falling due from 2018 on Debt falling due by 2018

February 2018 – successful issue of bonds as part of the €1bn EMTN programme, divided into two tranches:

€300m, 5 years, coupon 3-m Euribor +0.37%
€700m, 9.4 years, fixed rate of 1.5%

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17 H1 2018 Results

ACEA Group

Q&A session

Acea Group

H1 2018 Results

Rome, 31 July 2018

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18 H1 2018 Results

ACEA Group

Disclaimer

THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY’S MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL AND OPERATIONAL PERFORMANCE OF THE COMPANY AND ITS SUBSIDIARIES. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON ACEA S.P .A.’S CURRENT EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. BECAUSE THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES, ACTUAL FUTURE RESULTS OR PERFORMANCE MAY MATERIALLY DIFFER FROM THOSE EXPRESSED THEREIN OR IMPLIED THEREBY DUE TO ANY NUMBER OF DIFFERENT FACTORS, MANY OF WHICH ARE BEYOND THE ABILITY OF ACEA S.P .A. TO CONTROL OR ESTIMATE PRECISELY, INCLUDING CHANGES IN THE REGULATORY FRAMEWORK, FUTURE MARKET DEVELOPMENTS, FLUCTUATIONS IN THE PRICE AND AVAILABILITY OF FUEL AND OTHER RISKS. YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH ARE MADE ONLY AS OF THE DATE OF THIS PRESENTATION. ACEA S.P .A. DOES NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY RELEASE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS PRESENTATION. THIS PRESENTATION DOES NOT CONSTITUTE A RECOMMENDATION REGARDING THE SECURITIES OF THE COMPANY. *** PURSUANT TO ART. 154-BIS, PAR. 2, OF THE LEGISLATIVE DECREE N. 58 OF FEBRUARY 24, 1998, THE EXECUTIVE IN CHARGE OF PREPARING THE CORPORATE ACCOUNTING DOCUMENTS AT ACEA, GIUSEPPE GOLA – CFO OF THE COMPANY - DECLARES THAT THE ACCOUNTING INFORMATION CONTAINED HEREIN CORRESPOND TO DOCUMENT RESULTS, BOOKS AND ACCOUNTING RECORDS.